INSIGHT on the Issues
AARP Public Policy Institute
After the Supreme Court Decision:
The Implications of Expanding Medicaid for Uninsured
Low-Income Midlife Adults
Lynda Flowers, JD, MSN, RN
AARP Public Policy Institute
Matthew Buettgens, Ph.D.
The Urban Institute
The Affordable Care Act required states to expand their Medicaid programs to cover
more low-income people, including midlife adults.1 However, a recent U.S. Supreme
Court decision, while upholding the rest of the health reform law, effectively turned the
mandate into a state option. This Insight on the Issues examines the Court’s decision
and how uninsured midlife adults in states that take up this option could benefit.
The ACA Medicaid Expansion
The Affordable Care Act (ACA)—the
health reform law enacted in 2010—
required all states to expand their
Medicaid programs to cover individuals
under age 65 with income at or below
138 percent of the federal poverty level
(FPL). 2,3 Beginning in 2014, states can
receive 100 percent federal funding for
covering these newly eligible individuals
for three years. Beginning in 2017, the
federal portion will gradually phase
down to 90 percent by 2020.
Newly eligible individuals are those
whose income does not exceed
133 percent of the FPL; who are between
age 19 (or a higher age that the state has
elected) and age 65; who are not pregnant;
and who, as of December 1, 2009, were
not eligible for full Medicaid benefits
under a state plan or a waiver.4,5
To enforce this new mandate, the ACA gave
the Secretary of Health and Human Services
authority to withhold all federal Medicaid
funding for their entire program from states
that did not take up the Medicaid expansion.
Supreme Court Challenge to the
Medicaid Expansion
Twenty-six states challenged the
constitutionality of the mandatory
Medicaid expansion in the U.S. Supreme
Court.6 The states collectively argued that
the penalty for not complying with the
mandate—the possible loss of all federal
Medicaid funding for their entire
programs—was a coercive use of federal
power and therefore unconstitutional.
Accepting the coercion argument, the
Court ruled that while federal lawmakers
have the authority to expand Medicaid,
they may not impose the threat of losing
all federal Medicaid funding on states
that elect not to do so. 7 In making this
ruling, the Court effectively created a
state option to expand Medicaid in return
for enhanced federal funding.
States at the Crossroads
It is now up to each state to decide whether
to expand its Medicaid program to cover
low-income people who are currently
uninsured. There are several reasons why
After the Supreme Court Decision: The Implications of Expanding Medicaid for Uninsured Low-Income Midlife Adults
The majority of those in this age group
who would gain access to coverage
through Medicaid are single adults with
no dependents (52 percent), and over
half (53 percent) are women. Most have
a high school education or less
(approximately 68 percent). 13
taking advantage of the Medicaid expansion
can be a win-win proposition for uninsured
low-income midlife adults and for states.
Some of them are described below.8
The focus of this Insight on the Issues is
on midlife adults. However, there are
many reasons why states should take up
the Medicaid expansion for low-income
uninsured adults of all ages. These have
been well documented elsewhere. 9
Millions of Uninsured Midlife Adults
Would Gain Access to Care at a
Time in Their Lives when They Can
Most Benefit
Characteristics of Midlife Adults
Likely to Benefit from the
Medicaid Expansion
Between 2006 and 2011, there was a
15 percent increase in uninsured adults ages
45–64, going from 14.2 percent in 2006 to
16.3 percent in 2011.14 This increase
reflects, in part, the rise in unemployment
during the recent economic recession
(figure 2) and the associated lack of
employer-provided health insurance
coverage. Once they become unemployed,
older workers are out of work longer than
their younger counterparts, with an average
duration of unemployment in January 2013
of 43.8 weeks (compared to 32 weeks for
the younger age group).15
About 4 million low-income adults ages
45–64 who currently lack insurance
would gain access to Medicaid under the
expansion. 10 In Table 1, we show how
many uninsured midlife adults would
gain access to Medicaid in each state. 11
Approximately 60 percent of those in
this group are non-Hispanic whites.
However, non-Hispanic blacks and
Hispanics represent a significant
proportion of those who would gain
access to insurance through a Medicaid
expansion (approximately 18 and
16 percent, respectively) 12 (figure 1).
Figure 2
U.S. Unemployment Rate Age 45–64,
2006–2012
Percent Unemployed
Figure 1
Uninsured Adults Under 138 Percent
of Poverty Newly Eligible for
Medicaid by Race
All Nonelderly
Ages 45-64
White, Non-Hispanic
10%
8%
6%
4%
2%
0%
2006 2007 2008 2009 2010 2011 2012
Year
Black, Non-Hispanic
Source: AARP calculation from the Bureau of Labor Statistics,
Labor Force Statistics from the Current Population Survey Annual
Averages, 2006–2012 (numbers in thousands).
Hispanic
These uninsured adults would likely
benefit from an expansion, because the
prevalence of chronic conditions
increases during midlife. This is
especially the case for those with low
incomes. 16 We estimate that 11 percent
Other Race/Ethnicity
0%
20%
40%
60%
80%
Source: AARP analysis of Urban Institute estimates based on
analysis of American Community Survey Records, 2008, 2009,
and 2010 (adults only).
2
After the Supreme Court Decision: The Implications of Expanding Medicaid for Uninsured Low-Income Midlife Adults
of the midlife adults who would gain
access to Medicaid would be in fair to
poor health. 17
the program to pay for LTSS, like
home- and community-based LTSS,
personal care, home health care, and
institutional long-term care. 19
Uninsured people with chronic illnesses
are less likely to receive the care they
need to manage their health conditions
than their insured counterparts. They are
also more likely to have worse clinical
outcomes when they finally do receive
treatment for their conditions—typically
in expensive emergency rooms. 18
As the primary payer for LTSS for
low-income adults, states have a
unique opportunity to expand their
Medicaid programs to give lowincome midlife adults—who tend to
have multiple chronic illnesses—
access to care that has the potential to
improve or maintain their health status,
long before their conditions deteriorate
to the point where they are likely to
need costly Medicaid-financed LTSS,
in addition to their Medicare benefits.
Having Medicaid would give uninsured
low-income adults who are in their
middle years access to the treatments
and services they need to help them
manage, monitor, and better control their
chronic conditions. Of the 4 million
uninsured midlife adults who would gain
access to Medicaid, 1.5 million are
employed. The security of Medicaid
coverage would help them maintain
employment. Midlife adults who are
unemployed because they are in poor
health would benefit from Medicaid
coverage. The ability to improve their
health status could increase their ability
to re-enter the labor force.
 States that expand Medicaid early
can realize the biggest savings.
States that expand their programs
beginning in 2014 will receive
greater financial advantage than
those that expand in later years for
two reasons. First, the federal
government will pay 100 percent of
the cost of care for the expansion
group until the end of 2016. Second,
for a population that is likely to have
“pent-up” demand for health care, 20
costs associated with getting their
health conditions under control will
be covered 100 percent by federal
dollars between 2014 and the end of
2016. 21 For states that offer coverage
in 2014, by the time they are
required to begin paying a portion of
the expansion costs in 2017—which
is phased in over four years and does
not exceed 10 percent of the total
cost of the coverage—beneficiary
costs should be considerably less. 22
 States that invest in the health of
uninsured low-income adults
during their middle years might
realize significant benefits when
these individuals become eligible
for Medicare. Most people become
eligible for Medicare once they reach
age 65. Low-income adults who are
on Medicare are also likely to become
dual eligibles—which means they
will depend on Medicare for their
primary and acute health needs
(hospital, physician services,
laboratory and x-ray services) and on
Medicaid for help with their Medicare
cost sharing and their long-term
services and supports (LTSS) needs.
 Expanding Medicaid will give
uninsured midlife adults access to
potentially lifesaving preventive and
screening services and could reduce
disparities. People without health
insurance are far less likely to access
recommended preventive and screening
services—such as flu shots, cholesterol
Traditionally, dual eligibles have
been among the sickest, poorest, and
costliest Medicaid beneficiaries,
many of whom end up depending on
3
After the Supreme Court Decision: The Implications of Expanding Medicaid for Uninsured Low-Income Midlife Adults
screening, mammograms, and colorectal
cancer screening—than their insured
counterparts.23 The ability to access
prevention and health screenings means
that people can avoid contracting certain
illnesses and/or have their conditions
diagnosed and treated much earlier—
when they are less costly to a state’s
uncompensated care system. For
example, colorectal cancer is largely
preventable through screenings to detect
noncancerous polyps. Experts
recommend that adults begin screening
at age 50. Yet, many adults forgo the test
because of cost. Having access to
Medicaid would eliminate this barrier
for millions of low-income adults, and
help states avoid the high
uncompensated care costs associated
with treating advanced cancers.
8 percentage points less likely to have
health insurance coverage; and
Hispanics are 19 percentage points
less likely to have such coverage. An
Urban Institute study found that the
Medicaid expansion coupled with
premium tax credits available to
people through health insurance
marketplaces could reduce these
disparities by more than half for nonHispanic blacks, and by almost onequarter for Hispanics. 25,26
Racial and ethnic disparities in the
use of prevention and screening
services persist notwithstanding
health insurance status. However,
studies among African Americans
and Hispanics find an association
between health insurance and
increased receipt of preventive care.
These studies also find that insurance
status increases the likelihood of
having a regular source of care,
which also improves one’s chances
of receiving preventive services. 27
Thus, expanding Medicaid could
have a positive impact on reducing
disparities in the use of prevention
and screening services.
Because Medicaid requires
beneficiaries to pay only nominal
cost sharing when they receive
services, states that take up the
expansion may increase the
likelihood that low-income people
will take advantage of recommended
preventive and screening services. In
addition to providing access to
prevention and screening through a
Medicaid expansion that is largely
federally financed, states can reduce
their financial exposure by an
additional percentage point by taking
advantage of a provision in the ACA
that allows them to elect an option to
eliminate cost sharing for certain
preventive and screening services. 24
While this may not seem like much
of a saving, states should carefully
consider the health and financial
consequences of not maximizing
opportunities to provide access to
prevention and screening services.
 Making Medicaid available to low-
income adults who are uninsured
during their middle years can help
ensure that they are able to meet
basic needs as they age. A study of
low-income uninsured adults in
Oregon found that those who received
Medicaid experienced more financial
security than their uninsured
counterparts. Those with Medicaid
were 40 percent less likely to report
borrowing money or skipping
payments on other bills because of
medical expenses. They were also
25 percent less likely to have unpaid
medical bills that were sent to a
collection agency. 28 These findings
suggest that having Medicaid is critical
to ensuring that low-income adults are
able to meet their basic needs.
Finally, taking up the Medicaid
expansion could have a positive
impact on reducing disparities among
midlife uninsured adults. Compared
to whites, non-Hispanic blacks are
4
After the Supreme Court Decision: The Implications of Expanding Medicaid for Uninsured Low-Income Midlife Adults
Conclusion
Medicaid, thus reducing the burden of
uncompensated care at a time when
hospitals’ funding for such care will be
substantially reduced. 32
The option to expand Medicaid gives
states a cost-effective way to improve
the health status of uninsured lowincome people at a time in their lives
when they are most likely to be
developing chronic health conditions
such as diabetes, heart disease, and
stroke—conditions that, left untreated,
can result in costly deteriorations in
health status and premature death for
these individuals, and millions of dollars
in uncompensated care costs for states. 29
In fact, Medicaid expansions in three
states—Arizona, Maine, and New
York—were associated with significant
decreases in mortality, especially among
vulnerable populations, compared with
neighboring states that did not expand
Medicaid coverage. 30,31 In addition,
hospitals are facing significant cuts to
their disproportionate share hospital
(DSH) payments—federal dollars that
help fund uncompensated care for the
uninsured. These hospitals stand to
realize significant gains if states expand
In addition to saving lives and state
uncompensated care dollars, 33 states that
expand Medicaid are likely to
experience significant economic
benefits, including job growth and
increased income and state tax
revenues. 34,35 For example, in 2009,
6 percent of full-time jobs in Arkansas
were generated by the Medicaid
program. In addition, Arkansas officials
estimate that the state economy will be
hundreds of millions of dollars larger if
it opts to expand Medicaid, resulting in a
positive impact on state tax revenue. 36
In deciding whether to expand their
Medicaid programs, states should
carefully consider the positive impact of
an expansion on the health, well-being,
and longevity of their low-income
citizens who are in their middle years
and find themselves uninsured.
5
After the Supreme Court Decision: The Implications of Expanding Medicaid for Uninsured Low-Income Midlife Adults
Table 1
Current Uninsured under 138% FPL that
Gain Medicaid Eligibility Under the Expansion
Ages 45–64
Total
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
4,003,647
80,144
11,826
18,642
53,081
535,567
63,723
25,667
2,144
5,105
379,327
173,952
12,438
26,398
152,989
85,562
25,172
30,442
69,316
88,954
14,187
47,298
23,106
146,468
34,611
57,697
86,078
20,893
19,173
43,991
13,876
83,329
41,287
38,382
146,882
5,870
163,170
57,220
66,155
132,543
9,543
85,390
12,149
108,785
427,566
21,414
*
89,278
75,444
32,144
51,841
7,429
Source: ACS 2008–2010, Weighted to 2012
* Very small sample size.
6
All Nonelderly
13,804,538
298,637
44,762
64,558
200,841
1,756,185
201,770
81,966
6,801
16,979
1,164,916
629,912
37,960
97,249
503,581
330,931
88,463
118,002
256,296
305,558
40,170
160,402
80,869
520,246
122,626
210,747
320,084
58,212
71,361
139,331
43,172
269,817
132,356
127,308
514,026
21,804
540,993
212,255
224,477
459,582
32,455
272,836
40,057
334,731
1,659,778
95,883
774
315,541
270,854
113,900
168,650
23,878
After the Supreme Court Decision: The Implications of Expanding Medicaid for Uninsured Low-Income Midlife Adults
Endnotes
1
For purposes of this Insight on the Issues, midlife adults refer to adults ages 45 to 64.
2
The law technically requires states to cover all individuals with income at or below 133 percent of the
federal poverty level. But because the law eliminates historical income disregards for these new groups and
establishes a new across-the-board 5 percent income disregard, the effective income eligibility threshold is
138 percent of the FPL. L. Flowers, Health Reform Provides New Federal Money to Help States Expand
Medicaid (Washington, DC: AARP Public Policy Institute, 2010).
3
The federal poverty guidelines (commonly referred to as the federal poverty level or FPL) are one version
of the federal poverty measure. They are issued each year in the Federal Register by the Department of
Health and Human Services (HHS). The guidelines are used for administrative purposes—for instance, to
determine financial eligibility for certain federal programs. U.S. Department of Health and Human
Services, 2012 HHS Poverty Guidelines, Federal Register Notice, January 26, 2012,
http://aspe.hhs.gov/poverty/12poverty.shtml.
4
L. Flowers, Health Reform Provides New Federal Money.
5
States that were already providing comprehensive health coverage to parents and childless adults with
income up to 100 percent of the FPL when the ACA was enacted are called “expansion states” and will
initially receive less federal assistance than states that did not previously extend such coverage. However,
by 2019, the federal Medicaid assistance percentage (FMAP) for these states will be equal to the enhanced
FMAP available for the newly eligible adults.
6
The states were Alabama, Alaska, Arizona, Colorado, Georgia, Idaho, Indiana, Iowa, Kansas, Louisiana,
Maine, Michigan, Mississippi, Nebraska, Nevada, North Dakota, Ohio, Pennsylvania, South Carolina,
South Dakota, Texas, Utah, Washington, Wisconsin, and Wyoming. A Guide to the Supreme Court’s
Decision on the ACA’s Medicaid Expansion (The Henry J. Kaiser Family Foundation, August 2012).
7
Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. __, 132 S. Ct. 2566 (2012).
8
Other reasons exist. This Insight on the Issues presents those that are most relevant to midlife uninsured adults.
9
See, for example, J. Perkins, 50 Reasons Medicaid Expansion is Good for Your State (Carrboro, NC:
National Health Law Program, 2012).
10
Urban Institute estimates based on three-year merge of data from the American Community Survey,
(2008–2010), weighted to 2012.
11
Estimates in Table 1 are based on the 2008, 2009, and 2010 ACS combined. We computed MAGI based
on the detailed income components available on the survey and used the HHS Poverty Guidelines to
determine those with family MAGI below 138 percent of poverty. Immigration status was imputed based
on the methodology of Jeff Passel. Current eligibility for Medicaid was assessed using a model developed
at the Urban Institute that takes into account each state’s eligibility rules and groups people into the units
that would be used to determine eligibility.
12
Urban Institute estimates based on analysis of the ACS, 2008–2010 records.
13
Urban Institute estimates based on analysis of the ACS, 2008–2010 records (adults only).
14
AARP calculation based on Current Population Survey Data from March 2006 to March 2012,
February 4, 2013.
15
S. Rix, The Employment Situation January 2013: Jobs Added to the Economy but Unemployment Holds
Steady (Washington, DC: AARP Public Policy Institute, February 2013).
16
National Center for Health Statistics, Health, United States, 2011: With Special Feature on
Socioeconomic Status and Health (Hyattsville, MD: National Center for Health Statistics, 2012).
17
Urban Institute estimates based on three-year merge of data from the ACS (2008–2010) (adults only).
18
Institute of Medicine, Care without Coverage: Too Little, Too Late (Washington, DC: National Academy
Press, 2002).
7
After the Supreme Court Decision: The Implications of Expanding Medicaid for Uninsured Low-Income Midlife Adults
19
K. Young et al., Medicaid’s Role for Dual Eligible Beneficiaries (Washington, DC: Kaiser Commission
on Medicaid and the Uninsured, April, 2012).
20
The Henry J. Kaiser Family Foundation, Expanding Medicaid to Low-Income Childless Adults under
Health Reform: Key Lessons from State Experiences (Washington, DC: Kaiser Commission on Medicaid
and the Uninsured, July 2010).
21
L. Flowers, Health Reform Provides New Federal Money.
22
Ibid.
23
Institute of Medicine, Care without Coverage.
24
L. Flowers and W. Fox-Grage, Health Reform Law Creates New Opportunities for States to Save
Medicaid Dollars (Washington, DC: AARP Public Policy Institute, 2011).
25
Health insurance marketplaces are central locations where qualified individuals (e.g., those without
access to other health insurance coverage) can go to purchase coverage. Premium tax credits are available
in the marketplace to help make health insurance premiums more affordable to qualifying individuals. For
more information, see G. Smolka and S. Sinclair, The Creation of American Health Benefit Exchanges
(Washington, DC: AARP Public Policy Institute, March 2011).
26
L. Clemans-Cope, G. M. Kenney, M. Buettgens, C. Carroll, and F. Blavin, “Health Reform Could
Greatly Reduce Racial and Ethnic Differentials in Insurance Coverage,” Health Affairs 31, no. 5, 920–930.
27
Institute of Medicine, Care without Coverage.
28
K. Baicker and A. Finkelstein, “The Effects of Medicaid Coverage—Learning from the Oregon
Experiment,” New England Journal of Medicine 365, no. 8 (August 25, 2011).
29
Uncompensated care is medical care received, but not fully paid for, either out-of-pocket by individuals
or by a private or public insurance payer. The cost of unpaid care is estimated by using the benchmark of
what would have been paid for the services by private insurance. J. Hadley and J. Holahan, The Cost of
Care for the Uninsured: What Do We Spend, Who Pays, and What Would Full Coverage Add to Medical
Spending? Issue Update (Washington, DC, Kaiser Commission on Medicaid and the Uninsured, 2004).
30
Adults ages 35 to 64, minorities, and residents of poor counties experienced the greatest reductions in
mortality. B. Sommers, K. Baicker, and A. Epstein, “Mortality and Access to Care among Adults after State
Medicaid Expansions,” New England Journal of Medicine 367, no. 11 (September 13, 2012):1025–34.
31
University of Arkansas Sam M. Walton College of Business, The Economic Impact of Medicaid Spending in
Arkansas (Fayetteville, AR: University of Arkansas Sam M. Walton College of Business, May 2010).
32
The DSH cuts were premised on an expected increase in insurance coverage through the health insurance
exchanges and expanded Medicaid eligibility. If that careful balance is disrupted because states do not
expand their programs, millions will remain uninsured and continue to rely on safety net hospitals for care
at a time when the hospitals will see their funding for uncompensated care diminish.
33
It is estimated that states and localities will experience $18 billion in Medicaid savings on
uncompensated care. J. Holahan et al., The Cost and Coverage Implications of the ACA Medicaid
Expansion: National and State-by-State Analysis (Washington, DC: Kaiser Commission on Medicaid and
the Uninsured, November 2012).
34
C. Marks and R. Rudowitz, The Role of Medicaid in State Economies: A Look at the Research
(Washington, DC: Kaiser Commission on Medicaid and the Uninsured, 2009).
35
Some argue that the economic gains associated with expanding Medicaid are diminished by the fact that
individuals who were eligible but not enrolled in the program pre-expansion (mostly children), will be
identified and enrolled in Medicaid. However, research suggests that other ACA policies will drive this
phenomenon whether or not states take up the expansion. This same research found that states are likely to
realize net savings from the expansion, even with new enrollment of those where were previously eligible
but not enrolled. J. Holahan et al., The Cost and Coverage Implications of the ACA Medicaid Expansion.
8
After the Supreme Court Decision: The Implications of Expanding Medicaid for Uninsured Low-Income Midlife Adults
36
Testimony of Andrew Allison, Ph.D. Director,
Division of Medical Services, Department of
Health Services, State of Arkansas, before the
Committee on Energy and Commerce
Subcommittee on Health, U.S. House of
Representatives, “State of Uncertainty:
Implementation of PPACA’s Exchanges and
Medicaid Expansion,” December 13, 2012,
accessed at http://energycommerce.house.gov/
sites/republicans.energycommerce.house.gov/
files/Hearings/Health/20121213/HHRG-112IF14-WState-AllisonA-20121213.pdf.
AARP Public Policy Institute
601 E. Street, NW, Washington, DC 20049
www.aarp.org/ppi
202-434-3890, ppi@aarp.org
© 2013, AARP.
Reprinting with permission only.
9
INSIGHT on the Issues
Insight on the Issues No. 72, January, 2013